Mass Save Three-Year Plan 2025-2027: What’s New and What Was Left Out?

March 31, 2025 – On February 28, 2025, the Department of Public Utilities (DPU) issued its order on the Three-Year Energy Efficiency Plan (Three-Year Plan) for the Mass Save program for the period of 2025-2027. This was the culmination of an extended process that began with analyses and initial stakeholder engagement efforts in fall 2023 to solicit input on potential programmatic changes. The Mass Save Program Administrators (PAs) filed their draft plan on March 31, 2024 with the Energy Efficiency Advisory Council, which was followed by an extensive public engagement process, revisions, and filing of final plans on October 31, 2024.

The role and function of Mass Save has evolved over time. Mass Save was originally established as an energy efficiency program through the Green Communities Act of 2008. In the multiple revisions of the enabling statute since, the program has incorporated a focus on greenhouse gas (GHG) emissions and now more holistically supports electrification, building decarbonization, demand response, and other GHG reduction measures. As DPU notes in the order, “the 2025-2027 Three-Year plan term must function as a bridge between traditional energy efficiency and widescale decarbonization.” Over time, Mass Save has become one of the most important tools for municipalities to advance local building energy efficiency and decarbonization.

Summary of the Proposed Plan

The filed 2025-2027 Plan represented a substantial step forward in advancing key equity priorities with the Mass Save program. In addition to a significant overall increase in the proposed program budget from $3.95 billion to $4.99 billion, the PAs planned to increase spending on equity-oriented investments – including programs for low- and moderate-income residents, renters, residents speaking languages other than English, and small businesses – from $1.1 billion to $1.9 billion. Some of these investments will be focused in 21 “Designated Equity Communities,” which include the following communities in MAPC’s territory: Boston, Chelsea, Everett, Framingham, Lynn, Malden, Quincy, Revere, Salem, and Woburn.

Additionally, the PAs proposed to increase funding and flexibility for the Community First Partnership. This program supports community-based outreach for Mass Save programs with a focus on environmental justice communities and was introduced in the 2022-2024 Plan. It has proven to be a critical program for municipalities in advancing their climate goals through increasing awareness of and broader participation in Mass Save programs, with 52 communities across the state (23 in MAPC’s region) benefitting from the program.

While MAPC and our communities had some concerns about the draft plan and advocated for further improvements, MAPC ultimately recommended that DPU approve the Plan as filed after the PAs addressed stakeholder feedback and increased equity targets from the original draft.

Summary of the DPU Order

Overall, DPU approved most of the enhancements in the 2025-2027 Plan that were supported by MAPC. Throughout the Order, DPU delivered a strong endorsement of the increased focus on equity investments and new approaches towards addressing continued underserving of low- and moderate-income residents and renters. As is typical, DPU approves many programmatic changes as proposed, approves others with modifications required, and disapproves others. 

The biggest change: a $500 million cut. The most significant modification of the Plan ordered by DPU was a reduction in the overall program budget of $500 million, all of which must be drawn from the residential program. This reduction was not surprising; as DPU reviewed the plan, public concern grew around increases to residential gas rates. Some of this increase was attributable to an increase in the energy efficiency surcharge that funds Mass Save, and it was also driven significantly by the coldest winter in recent years and broader economic trends (inflation, tariffs, global gas supply, etc.).

While some reduction in the plan size was expected, it is still concerning: Mass Save is a cost-effective program, and the 2025-2027 plan was expected to deliver $13.6 billion in benefits to ratepayers and the Commonwealth—nearly three times higher than its costs. Reducing ratepayer charges may bring immediate relief, but at the cost of long-term benefits and slowing our progress towards our climate and energy efficiency goals. 

So, what will be the impact of the $500 million in cuts? We’re not sure yet: the PAs must file their revised residential budgets by April 30, 2025. Here’s what we do know now:

• The residential program budget will drop from $2.7 billion to under $2.2 billion (a 19% reduction). At the reduced value, the approved residential budget represents an increase of 16% nominally from the 2022-2024 Plan’s original residential budget. Accounting for the significant inflation from the past few years, this translates to roughly level funding in real terms.
• Low-income program budgets are not affected by the reduction, as the low-income program is considered separate from the residential program. However, moderate-income and some renter-focused spending is included in the residential budget, which could lead to reductions in targets for these underserved customer groups. MAPC would oppose programmatic cuts for these customer groups, who face significant energy burdens that Mass Save program participation can help alleviate.
• Given that 50% of the performance incentive the PAs can earn is tied to equity indicators (including equity benefits, benefits from measures serving renters, and heat pumps installed in LMI housing), it is unclear how much the PAs will cut from moderate-income and renter programs relative to market-rate residential programs.

As the PAs review how to cut the residential budget by nearly 20%, we ask that they preserve the meaningful progress in advancing equity represented by the 2025-2027 Plan and not backtrack from their commitments. It is worth noting that the PAs had already proposed some reductions to residential program offers to contain costs, including a phased reduction in heat pump rebates and reductions in 0% HEAT Loan durations for higher income households. 

Expanded support for community-driven decarbonization solutions. DPU approved several new initiatives and program enhancements that will provide further support to our communities, with a focus on environmental justice and the designated equity communities.

• DPU approved the Municipal Energy Manager Grant program launched by the PAs at the end of 2024 as a demonstration project. MAPC is currently working with National Grid and MVPC to develop a training curriculum to support these new staff.
• The PAs will expand support for decarbonization at schools in underserved communities, including a demonstration project to fully decarbonize five existing schools selected by DOER.
• The Community First Partnership program will receive a boost in funding and programmatic improvements, including extending the program term to three years, increasing funding for Energy Advocates, streamlining marketing processes, expanding support for small business engagement, and exploring pathways for enhancing data sharing. While DPU did not explicitly endorse or rule out establishing comprehensive vendor-level data sharing agreements with CFP communities, they did approve Cape Light Compact’s to directly contract with and share customer data with its CFP vendor, suggesting that they may rule favorably on a request from the PAs to establish such agreements with CFP communities in the future provided adequate data protection measures are established.

Limited disapprovals. Beyond the ordered residential budget reduction, the Order was light on disapprovals from DPU of specific enhancements and new initiatives requested—which may in part reflect the expanded planning and stakeholder engagement period mandated by DPU in the previous Three-Year Plan Order. Notably DPU disapproved two of the new GHG-centered measures proposed by the PAs (carbon capture and embodied carbon reductions in new construction). In its comments, MAPC had urged DPU to disapprove the carbon capture measure in particular as it had no connection to energy savings and recommended only approving the other measures if they could be linked to energy savings.

Many process modifications. As Mass Save grows and new challenges are encountered, the PAs propose and the DPU regularly issues new rules on how the forthcoming plan year will be implemented, as well as other procedural changes separate from the core of the Plans. Notable process modifications include the following:

• DPU approved the proposed novel “pooling” of electrification costs and benefits, such that the costs and benefits (for cost-effectiveness testing and bill surcharge purposes) are pooled across all gas and electric PAs regardless of the customer’s existing heating source or service area. Gas and electric energy efficiency surcharges (EES) are calculated and charged based on the service area within a utility (e.g. NSTAR Gas and Eversource Gas of MA are separate utilities within the Eversource umbrella and have different EES charges), which can lead to significant differences in EES rates for customers of different utilities depending on participation rates. The PAs, with the backing of DOER, the Attorney General’s Office, and EEAC argued that this will lead to more consistent ratepayer charges across different utility territories and that the pooling was appropriate for electrification where benefits are primarily oriented around achieving statewide GHG emissions reduction targets.
• DPU changed the requirements for when PAs need to file midterm modifications (MTMs), given the sheer number of MTMs filed in 2024 necessitating urgent approvals and the role of MTMs in driving the significant increase in the gas EES in winter 2024. Moving forward, PAs will be required to file MTMs when budgets are expected to be exceeded or underspent by at least 5% at least four months before a potential decision date is necessary. Additionally, PAs will need to propose in their filings at least one alternative to a MTM that would not increase spending or bill impacts while minimizing program disruptions.
• Residential gas bills will need to begin showing the EES as a line item on bills beginning in November 2025. Unlike with electric bills where most of the clean energy and energy efficiency-related ratepayers charges are disaggregated, gas bills historically have combined all policy charges under the local distribution adjustment factor or charge.

All in all, there is much to be excited about with the next chapter of the Mass Save Program. As in previous years, MAPC will look for opportunities to shape the rollout of the 2025-2027 plan and represent the interests and concerns of our communities. Check back later this spring for more info on how the revised residential program budgets may affect decarbonization efforts in your community.